Going through a divorce or a separation can be an extremely stressful and emotional process. The good news is that you do not need to go through this difficult time alone. There are many resources and support services available to help you get through this difficult time.
Although your finances may be the last thing on your mind, it is vital that you take steps early to sort out your finances and protect your rights and your financial future.
Where to Start
Many people going through a divorce or separation do not even know where to begin at sorting out their finances. To help you through this process, here is a look at some of the initial steps you should take to as soon as possible after a divorce or a separation.
- Seek Legal Advice. One of the first steps you need to take is to seek out legal advice. A professional attorney can help to protect your legal rights through this process. The attorney can help you freeze any bank accounts, stop the sale of joint property until a divorce settlement has been finalised, and help you separate any joint assets and debts.
- Set Up Separate Account. Once you are separated from your partner, you should set up your own separate savings and transactions accounts at the bank. Be sure to contact your employer and/or Centrelink and provide them with your new account information and change any personal, direct billings that come out of your joint account.
- Make an Inventory List. You also want to make a complete listing of all your assets, property and debt that is jointly owned. This will make it easier for your lawyer to properly divide the property in your divorce settlement.
- Change Rental Agreement. If, as a couple, you lived in a rental home, you must change the rental agreement to reflect your divorce or separation. The name of the spouse who moved out of the rental home must be removed from the agreement. Otherwise, both parties will be responsible for the rental home, and both would be legally able to live in the home.
- Record Important Dates. Right from the beginning of your separation, you should start recording important dates, included the exact date of separation. The Australian courts require that couples be separated for at least 12 months prior to filing for a divorce, so these dates can be extremely important.
Dealing with the Change of Income
Both a divorce and a separation will instantly affect your household income. You are likely to see less income coming in each week, since you will only be having one income. It is important that you assess this change, create a budget, and set your own personal financial goals. Here are some tips to help deal with this change of income.
- Assess Your Income. One of the first things you should do is to assess your income and your debts. The first step in this process is to gather all of the necessary papers and information together, and then write it all down on paper so you can track it better. Here is an initial list of some of the information you should have on hand.
- Regular bills, such as utility, phone and television bills
- Bank accounts information and statements
- Credit cards and the current statement
- Documentation of all personal investments and assets
- Mortgage or rental papers
- Insurance papers, including car, house and life insurance
- Superannuate account information
- Copies of tax returns for at least seven years
- Create a Budget. You also want to start tracking your income and expenses and create a new household budget. This will help you see where you are spending your money and show you areas where you may be able to cut back. If at all possible, try to set some money aside for savings. Even a small amount each week will add up over time.
- Set Financial Goals. Now that you are on your own, it is a good time to set some of your own personal financial goals. You should plan to sit down with a financial counsellor and discuss your options. He/she will be able to give you advice on how to manage and invest your money.
If you are currently receiving payments from Centrelink, you must contact them as soon as the separation occurs. They will adjust your payments accordingly. If you are not currently receiving Centrelink payments, but are having a difficult time keeping up with your finances, you should immediately apply for benefits. You may be eligible for an array of financial benefits that can help you through this difficult time.
If you have children, you may be eligible for child support from the other spouse to help cover some of their expense. Contact the Department of Human Services for help obtaining child support.
You should also reach out to your family and friends, who may be able to provide emotional and financial support.
Make the Necessary Changes
Once you are divorce or separated, it is important that you make all of the necessary changes to all of your financial policies. Here is a look at some of the changes you must make to protect your future.
- Insurance Policies. You should make any necessary changes to all of your insurance policies to ensure that they are only in your name. This includes your home, car and life insurance. You also may want to change your beneficiary on your life insurance policy.
- Superannuation. Any superannuation accounts held by both parties in a divorce may be split between the parties. If your divorce included such a split in your superannuation, be sure all the appropriate paperwork was done to complete this process. You can find out more about splitting superannuation accounts at The Family Law Courts website or the Attorney General Department’s website.